Heritage House of Marshall Health & Rehabilitation, ALJ Ruling 2025-1 (HHS-CRD October 23, 2024)

RULINGS

Background

Petitioner, Heritage House of Marshall Health & Rehabilitation, is a long-term care facility located in Marshall, Texas, that participates in the Medicare program.  Surveyors from the Texas Health and Human Services Commission (state agency) completed a complaint investigation survey on February 15, 2023.  Based on the survey findings, the Centers for Medicare & Medicaid Services (CMS) determined that the facility was not in substantial compliance with Medicare program requirements and imposed remedies. 

Specifically, CMS found that the facility was not in substantial compliance with the following program requirements: 

• 42 C.F.R. § 483.10(g)(14)(i)-(iv) (Tag F580 – resident rights:  notification of changes), cited at scope and severity level J (isolated instance of substantial noncompliance that poses immediate jeopardy to resident health and safety);
• 42 C.F.R. § 483.12(a)(1) (Tag F600 – freedom from abuse, neglect, and exploitation), cited at scope and severity level J;
• 42 C.F.R. § 483.21(b)(1), (3) (Tag F656 – comprehensive, person-centered care plans), cited at scope and severity level J;
• 42 C.F.R. § 483.25(b)(1)(i)-(ii) (Tag F686 – quality of care:  skin integrity), cited at scope and severity level J;
• 42 C.F.R. § 483.25(g)(1)-(3) (Tag F692 – quality of care:  assisted nutrition and hydration), cited at scope and severity level J; and
• 42 C.F.R. § 483.25(d)(1)-(2) (Tag F689 – quality of care:  accident prevention), cited at scope and severity level G (isolated instance of substantial noncompliance that causes actual harm but does not pose immediate jeopardy to resident health and safety). 

CMS Exs. 1, 2. 

As enforcement remedies, CMS imposed civil money penalties of: 

• $8,025 per day for three days of immediate jeopardy (September 14 through 16, 2022) (subtotal:  $24,075);
• $260 per day for 120 days of substantial noncompliance that did not pose immediate jeopardy (September 17, 2022, through January 14, 2023) (subtotal:  $31,200);
• $8,025 per day for 31 additional days of immediate jeopardy (January 15 through February 14, 2023) (subtotal:  $248,775); and
• $260 per day for 23 additional days of substantial noncompliance that did not pose immediate jeopardy (February 15 through March 9, 2023) (subtotal:  $5,980).  

Total:  $310,030.  CMS Ex. 2 at 10.  

Issues

This case presents the following issues: 

1. From September 14, 2022, through March 9, 2023, was the facility in substantial compliance with Medicare program requirements;
2. If, from September 14 through 16, 2022, and, from January 15 through February 14, 2023, the facility was not in substantial compliance with Medicare program requirements, did its deficiencies then pose immediate jeopardy to resident health and safety; and  
3. If the facility was not in substantial compliance, are the penalties imposed – $8,025 per day for 34 days of immediate jeopardy, and $260 per day for 143 days of substantial noncompliance that did not pose immediate jeopardy – reasonable?

Petitioner complains about the quality of the survey, arguing that “numerous irregularities . . . call into question the veracity of the entire statement of deficiencies.”  Hrg. Request at 2.  Petitioner does not allege that any specific finding was compromised by the survey performance.  Instead, Petitioner complains that the surveyors returned multiple times over the course of two weeks, adding new deficiencies each time, and that deficiencies were cited that surveyors had said would not be cited.  Id. at 2-3.  

Allegations of inadequate survey performance are irrelevant to administrative law judge (ALJ) or Departmental Appeals Board review of CMS’s noncompliance and remedy determinations.  42 C.F.R. § 488.318(b) (providing that inadequate survey performance does not relieve the facility of its obligation to meet all program requirements or invalidate adequately documented deficiencies); Avon Nursing Home, DAB No. 2830 at 2, 11 (2017) (holding that the survey agency’s purported failure to comply with provisions of the Medicare statute did not invalidate CMS’s noncompliance determination or enforcement remedy). 

[T]he ultimate issue before an ALJ is not how the state agency performed the survey or what process it followed to reach its conclusions, but “whether the evidence as it is developed before the ALJ supports” CMS’s independent “finding of noncompliance” under the relevant participation requirements.  

Avon Nursing, DAB No. 2830 at 11 (emphasis in original), (quoting Sunshine Haven Lordsburg, DAB No. 2456 at 21 (2012), aff’d in part and transferred, Sunshine Haven Nursing Operations, LLC v. U.S. Dep’t of Health & Human Servs., 742 F.3d 1239 (10th Cir. 2014)). 

Exhibits

Petitioner’s objections to CMS Exhibits.  CMS submitted 15 exhibits (CMS Exs. 1-15).

Petitioner objects, or partially objects, to four of those exhibits:  CMS Ex. 1 (statement of deficiencies); CMS Ex. 2 (notice letters); CMS Ex. 12 (surveyor’s written declaration); and CMS Ex. 13 (surveyor manager’s written declaration).  CMS responded to Petitioner’s objections. 

For the most part, Petitioner attacks CMS’s legal positions in the guise of objecting to its exhibits.  Petitioner is free to challenge CMS’s legal arguments and to present its own.  However, that Petitioner disagrees with legal conclusions contained in the documents does not make the documents inadmissible. 

I have broad discretion to admit evidence.  The Federal Rules of Evidence do not apply to this administrative proceeding, and I may receive evidence, including hearsay, that would be inadmissible under the federal rules.  42 C.F.R. § 498.61; Lifehouse of Riverside Healthcare Ctr., DAB No. 2774 at 9 (2017).  I may admit hearsay “consistent with procedural ‘integrity and fundamental fairness.’”  Omni Manor Nursing Home, DAB No. 1920 (2004) (quoting Richardson v. Perales, 402 U.S. 389, 410 (1971)); Britthaven, Inc., DAB No. 2018 at 3 (2006) (“In administrative proceedings generally, and in Chapter 498 proceedings expressly, hearsay is admissible and can be probative on the issue of the truth of the matter asserted, where sufficient indicia of reliability are present.”). 

Moreover, I am required to inquire “fully into all of the matters at issue” and to admit any documents that are relevant and material.  42 C.F.R. § 498.60(b). 

CMS Ex. 1 – CMS’s Statement of Deficiencies (Form CMS-2567) 

Petitioner objects to my admitting the statement of deficiencies because:  1) it includes opinions that the facility has violated regulations, and, “if the existence of a deficient practice is a legal conclusion, then the statement of deficiencies should not be admissible to establish a legal conclusion”; 2) the document contains hearsay from individuals not affiliated or under the control of Petitioner who are not listed as CMS witnesses; and 3) the surveyor opinions regarding medical issues should be excluded “as CMS has not established a proper predicate for their admission.”  DAB E-File Dkt. C-23-465, Doc. # 16c at 2. 

Petitioner’s objections have no merit. 

As noted above, I am required to inquire fully into the matters at issue and to admit any documents that are relevant and material.  This necessarily includes the statement of deficiencies.  A statement of deficiencies sets out the survey findings on which CMS bases its enforcement actions that are the subject of the appeal and, for that reason, is “unquestionably relevant and material evidence.”  Avalon Place Trinity, DAB No. 2819 at 38 (2017); see Oxford Manor, DAB No. 2167 at 2 (2008) (holding that a statement of deficiencies may function both as a notice document and as evidence of facts asserted therein); Magnolia Estates Skilled Care, DAB No. 2228 at 30 n.15 (2009); Jennifer Matthew Nursing & Rehab. Ctr., DAB No. 2192 at 47 n.22 (2008) (holding that CMS need not present evidence in support of a finding in a statement of deficiencies that is not disputed); Guardian Health Care Ctr., DAB No. 1943 at 12 (2004) (characterizing the statement of deficiencies as a “contemporaneous record of the survey agency’s observations and investigative findings.”).  As such, the statement of deficiencies is relevant and material and must be admitted. 

With respect to Petitioner’s specific arguments: 

1. The legal conclusions.  Inasmuch as the statement of deficiencies is (in part) a notice document, it would be truly odd (and not very useful) if it did not specify which regulations were allegedly violated and why.  Moreover, that the document is admissible does not mean, as Petitioner suggests, that arguing with witnesses as to the validity of their legal opinions, which is generally not helpful, should be allowed.  The parties, of course, must address the question of whether the regulations have been violated, but such legal arguments are better presented directly to the ALJ, who does not review CMS’s conclusions or determinations about earlier state agency-level review but rather reviews the record de novo and determines whether the facility was in substantial compliance with applicable requirements.  Avon Nursing, DAB No. 2830 at 12; Avalon Place, DAB No. 2819 at 12 n.8.
2. Hearsay.  With respect to the hearsay statements included in the statement of deficiencies, hearsay is specifically admissible.  42 C.F.R. § 498.61; Lifehouse of Riverside, DAB No. 2774 at 9.  The parties are free to argue what, if any, weight I should give to those statements.  See, e.g., Evergreene Nursing Care Ctr., DAB No. 2069 at 13-14 (2007).  And, if Petitioner determines that the testimony of any particular individual is necessary for the full presentation of its case, it may request a subpoena, pursuant to 42 C.F.R. § 498.58.  
3. Opinions.  With respect to which witnesses may offer opinions, that an opinion may not be well-supported does not mean that the testimony is inadmissible in these administrative proceedings.  It means that the testimony should not be afforded much, if any, weight.  See, e.g., Copperas Cove LTC Partners, Inc., DAB No. 3049 at 16 (2021); River City Care Ctr., DAB No. 2627 at 13-16 (2015); Golden Living Ctr. – Frankfort, DAB No. 2296 at 6-8 (2009).  

CMS Ex. 2 – CMS notice letters

Petitioner does not object to my admitting CMS Ex. 2 (CMS’s notice letters) but expresses concern about why they are being offered.  DAB E-File Dkt. C-23-465, Doc. # 16c at 2.  The notices are relevant and material and must be admitted.  If Petitioner disagrees with CMS’s use of the documents, it is free to make those arguments.  

CMS Ex. 12 – the written declaration of Surveyor Clavion Hall and CMS Ex. 13 – the written declaration of Surveyor Manager Gregg Wofford

Petitioner objects to portions of Surveyor Hall’s written declaration, again complaining that it includes legal conclusions; opinions that the surveyor is “not legally qualified to make”; and hearsay.  DAB E-File Dkt. C-23-465, Doc. # 16c at 2-3. 

I have already discussed why evidence is admissible, notwithstanding Petitioner’s objections to surveyor legal opinions, surveyor qualifications, and hearsay. 

Petitioner objects to Surveyor Manager Wofford’s written declaration, arguing that it is “irrelevant” that he agrees with his colleague, Surveyor Hall, and that “no proper predicate [has been] established for any of his testimony or bases for his opinion that he agrees with her findings.”  DAB E-File Dkt. C-23-465, Doc. # 16c at 3.  Surveyor Wofford was Surveyor Hall’s nurse manager, with whom Surveyor Hall consulted and who reviewed and approved the surveyor’s findings.  His testimony is therefore relevant and material and may be admitted. 

As the Departmental Appeals Board has observed, surveyors “are professionals who use their judgment, in concert with Federal forms and procedures, to determine compliance.”  Sunshine Haven, DAB No. 2456 at 7; 42 C.F.R. § 488.26(c)(3).  CMS provides them with “comprehensive training” in multiple areas, including applying and interpreting regulations, survey techniques and procedures, and techniques for auditing resident assessments and care plans.  Surveyors are perfectly capable of making and reporting their observations.  In fact, that is their job.  42 C.F.R. §§ 488.26(c)(3), 488.314(b); Omni Manor, DAB No. 1920 (finding that a registered nurse surveyor is qualified to explain how underlying facts constitute program deficiencies); see Lakeport Skilled Nursing Ctr., DAB No. 2435 at 6-7 (2012) (describing registered nurse surveyors’ qualifications to opine on the potential harm posed by staff failing to follow physician orders in caring for diabetic residents). 

Finally, even if their opinion testimony required significant, specialized expertise, the testimony would be admissible, although the weight it merited would depend on the witness’s qualifications to render the opinion.  See Copperas Cove, DAB No. 3049 at 16; River City Care, DAB No. 2627 at 13-16; Golden Living Ctr., DAB No. 2296 at 6-8. 

For all of these reasons, I admit into evidence CMS Exs. 1-15. 

CMS’s objections to Petitioner’s exhibits.  Petitioner submitted 27 exhibits (P. Exs. 1-27).  CMS objects to six of those exhibits:  P. Ex. 2 (Notice of Accepted Plans of Correction for August 17 and December 7, 2022 surveys); P. Exs. 7, 16, 18 (medical records for facility residents # 1 and # 3); P. Ex. 23 (palliative performance scale guidelines); and P. Ex. 24 (written declaration of corporate vice president).  Petitioner did not respond to CMS’s objections. 

P. Ex. 2 – Notice of accepted plans of correction

CMS objects to the state agency’s September 12, 2022, and January 3, 2023 notices that it accepted the facility’s plans of correction for surveys completed on August 17 and December 7, 2022.  CMS argues that the notices are irrelevant because they do not establish that the facility was in substantial compliance at the time of the February 15, 2023 survey.  DAB E-File Dkt. C-23-465, Doc. # 19 at 1.  According to Petitioner, P. Ex. 2 establishes that, in December 2022, the facility was in substantial compliance with the regulation governing comprehensive care plans (42 C.F.R. § 483.21(b)(1), (3)).  P. Br. at 4 n.2. 

The documents do not establish that the facility was in substantial compliance with section 483.21(b) at the time of the February 15, 2023 survey.  In fact, they do not even establish that the facility was in substantial compliance on the dates the documents were issued – September 12, 2022, and January 3, 2023.  First, these were state findings, not CMS findings.  “CMS’s findings of noncompliance take precedence over those made by the State.”  W. Tex. LTC Partners, Inc., DAB No. 2652 at 18 (2015); Lopatcong Ctr., DAB No. 2443 at 12-13 (2012) (finding that the state agency’s determination that the facility was in substantial compliance is not binding on CMS); 42 C.F.R. § 488.452(a)(2)(i). 

Second, the documents establish only that the state agency accepted the facility’s plan of correction, apparently following complaint investigations, which is not the same as finding that the facility corrected the deficiency.  (“A desk review may be performed.  If, during a future visit, violations or deficiencies that were considered corrected through a desk review are discovered not to have been corrected, enforcement actions may be recommended.”).  P. Ex. 2 at 1-2; seeW. Tex., DAB No. 2652 at 18 (holding that a finding that previously-cited deficiencies have been corrected is not the same as a finding that the facility has achieved substantial compliance). 

Nevertheless, the documents are not irrelevant.  That the facility submitted plans of correction suggests that the facility was not in compliance with the regulation at the times of the complaint investigations.  To determine whether a CMP is reasonable, I apply the factors listed in 42 C.F.R. § 488.438(f), which include the facility’s history of noncompliance, including repeat deficiencies.  The documents (and Petitioner’s description of them) tell me that the facility was previously not in compliance with the regulation governing comprehensive care plans.  If I find here that the facility was not in substantial compliance, the documents may be relevant in determining whether the CMPs are reasonable. 

P. Exs. 7, 16, 18 – resident medical records and P. Ex. 23 – palliative performance scale guidelines issued for practitioners in British Columbia

CMS objects to P. Exs. 7, 16, 18, and 23 “on the basis of relevance” and because Petitioner did not cite to them in its pre-hearing brief.  DAB E-File Dkt. C-23-465, Doc. # 19 at 1.  The medical records are for Resident 1 and Resident 3.  Because deficiencies were cited based on the treatment provided to these residents, their treatment records are plainly relevant and material and must be admitted.  (I discuss the relevance of P. Ex. 23 separately). 

CMS also objects because Petitioner did not cite to these exhibits in its pre-hearing brief, “and it is unclear how these proposed exhibits are relevant to Petitioner’s case.”  CMS suggests that Petitioner did not comply with the ALJ order, which requires “[p]incitation . . . where a party cites to the evidence of record.”  DAB E-File Dkt. C-23-465, Doc. # 19 at 1.  Inasmuch as Petitioner did not cite to these exhibits at all, I cannot conclude that Petitioner violated the ALJ order. 

Although it may seem an ineffective strategy, a party is not required to cite to any exhibits, although, in failing to do so, the party risks having its arguments disregarded as unsupported.  The ALJ is not required to parse through the evidence to determine whether an argument is supported.  Unless the support is obvious, I may assume that no document supports the argument. 

P. Ex. 23 – palliative performance scale guidelines issued for practitioners in British Columbia

CMS also objects to P. Ex. 23 because these guidelines were issued by a Canadian – not a U.S. – authority, and “it is unclear how Canadian guidelines [apply] to a nursing home in the United States of America.”  DAB E-File Dkt. C-23-465, Doc. # 19 at 2.  While it seems odd to apply another country’s standards to a U.S. institution, that doesn’t necessarily mean that the guidelines are irrelevant.  They are admissible. 

P. Ex. 24 – the written declaration of Sandra Hayes-Hall, corporate vice-president of the facility’s parent company 

CMS objects to vice-president Hayes-Hall’s written declaration, arguing that she is not an expert, and her testimony is not relevant.  DAB E-File Dkt. C-23-465, Doc. # 19 at 2.  I agree that one section of her written declaration is irrelevant – her complaints about the survey “irregularities.”  See discussion above.  She claims that she oversees the facility (along with other facilities) and is familiar with regulatory requirements and the resident care needs.  To the extent that she knows what happened at the facility, her testimony is relevant.  As with CMS’s witnesses, if her opinions are not well-supported, I will afford them little, if any, weight.  But the testimony is, nevertheless, admissible.  

For all of these reasons, I admit into evidence P. Exs. 1-27. 

Witnesses

CMS lists three witnesses and provides their written direct testimony: 

1. Clavion Hall, LBSW (surveyor) (CMS Ex. 12)
2. Gregg Wofford, BSN, RN (surveyor manager) (CMS Ex. 13)
3. Alon Neidich, MD (expert) (CMS Ex. 14)

Petitioner has asked to cross-examine Surveyor Hall and Dr. Neidich.

Petitioner lists four witnesses and provides their written direct testimony: 

1. Ronald Payne, CEO (P. Ex. 27)
2. Sandra Hayes-Hall, RN, VP (P. Ex. 24)
3. Cassandra Mims, RN, DON (P. Ex. 25)
4. Bonnie Jackson, LVN (P. Ex. 26)

CMS has objected to Petitioner’s presenting VP Hayes-Hall as a witness.  DAB E-File Dkt. C-23-465, Doc. # 19 at 2.  For the same reasons I have admitted her written declaration, I overrule CMS’s objections. 

CMS has asked to cross-examine CEO Payne, DON Mims, and LVN Jackson. 

The parties will be expected to produce their witnesses for cross-examination at the hearing. 

Pre-hearing Conference.

We will schedule a pre-hearing conference within the next two weeks, at which we will reschedule the hearing (which will be conducted by video conference).  At the pre-hearing conference, the parties will confirm which witnesses must be produced for cross-examination. 

I expect cross-examination to remain within the parameters of the direct testimony.  Cross-examination should not be conducted as if it were a deposition. 

Because you have the witnesses’ direct testimony in front of you, I will also expect you to be well-prepared, and your cross-examinations to be focused and succinct.  As I have indicated, I am not interested in the witnesses’ legal opinions.  Legal arguments should be made in writing, to me.  I will not allow attorneys to argue with the witnesses.